In my opinion, that oversimplifies it. PlayStation and Xbox have disks without the “Next Gen” Version on it for years, but nobody cared. At this point there are also no games that have this license-on-a-cartridge.
After all, you can still sell the cartridge, something you cannot do with a completely digital game.
Nintendo warns that it can brick Switch consoles if it detects hacking, piracy (arstechnica.com) angielski
One might wonder about the ratio of Nintendo’s legal budget to actual piracy losses....